NEW YORK (CNNMoney.com) -- I wanted to get college funds started for the kids this year. Should I invest in a 529 plan or a Roth IRA? I thought you could take money out of your Roth for education and not be penalized. - James, Kansas.

You are right about the Roth. But you're better off with a 529 plan because there are better tax incentives. While you won't be penalized if you take money out of your Roth for education purposes, the money you take out will affect your child's ability to get financial aid according to Mark Kantrowitz of Finaid.org.

In a 529 savings plan, no only will this not affect your child's ability to get financial aid, but half of states - including Kansas - let you deduct your contribution to 529 from income taxes. For more information on 529s, check out savingforcollege.com.

Cleaning your credit report

How do I remove old collections off of my credit reports that have been paid years ago? - Randy

Here's the bad news: Paid collections don't get removed simply because they're paid, says John Ulzheimer of Credit.com. But all negative info has a statute of limitations. For collections it's 7 years. After 7 years the bureaus automatically purge the data and it's gone for good.

Now, here's the good news: As the collection ages, it loses negative value. So your scores will improve organically over time even if nothing ever changes on your credit reports.

Legitimate work from home opportunities

Are there any legitimate "work-from-home" sites that we can use to earn additional income? They all seem too good to be true. - Judy, Texas

Judy, you're right to be skeptical. Many work-from-home companies promise a lot, but deliver nothing - except more headaches. But there are legitimate opportunities.

Check out Alpineaccess.com. You can be a call-center agent for companies like J. Crew and 1-800 Flowers. You may also want to check out liveops.com. Remember, legitimate work at home sponsors should tell you in writing what is involved in the program.

Find out if you will be paid a salary or by commission and get the total cost of the work-at-home program, including supplies, equipment and membership fees. Be wary of exaggerated claims of potential earnings and demands.

And of course, check in with the Better Business Bureau if you're thinking about signing up with a company.

Recovering from bankruptcy

I recently filed for Chapter 7 bankruptcy. I now face the hurdles of life after bankruptcy. What steps do you recommend to quickly recover and recapture a more favorable FICO score? - Shawn, Maryland

The good news is that there is life after bankruptcy.

The most important thing you can do is pay your bills on time. That counts the most in your FICO score.

Then, keep your balances low on your credit cards. You don't want to go out opening a lot of credit cards, but you shouldn't necessarily close down credit card accounts since the length of time you've been using credit also counts in your credit report.

And don't worry Shawn, in time, the bankruptcy will count less and less against your score

How to invest a few thousand bucks

My wife and I have about $6000 that we are looking to invest in something. We are in our mid 30's, what do you suggest? - Anonymous

If it's a long term investment, consider investing in index funds, ETFs or asset allocation funds with a company like Fidelity or Vanguard. Asset allocation funds basically take rebalancing out of your hands. You just decide what kind of risk portfolio you want - ether conservative, moderate or aggressive, and the fund is rebalanced accordingly.

Given the recent losses in the stock market now is a good time to get in.

Roth or traditional IRA?

I have rolled over two different 401(k)s from previous jobs in 2007 to one traditional IRA. Should I "convert" it to a Roth IRA? I am 35 years old. - Kevin

It's a good move, but make sure you can take the tax hit.

When you convert a traditional IRA into a Roth IRA, you'll have to pay taxes on that amount you transfer says Rich Zito of FlynnZito. And that could be thousands of dollars.

But since you're young and likely to be in a higher tax-bracket when you retire, it'll be worth your while if you can convert your IRA to a Roth IRA. The tax hit you take now will be less expensive than the tax hit you'll take later when you're in a higher bracket.

Graduating with credit card debt

I am about to graduate from college but I have a lot of credit card debt on top of my student loan. Will it be better for me to consolidate my credit card debt? - Deborah, Wash.

Consolidating only makes sense if the new loan has a considerably lower interest rate than all of your credit cards says Ulzheimer. The challenge is finding a lender and that's going to be more difficult in today's environment.

Creditors want to see higher scores, and that's going to be hard with a lot of credit card debt. Check out credit.com to see what kind of personal loan you may qualify for.

Your best bet may be to transfer your balances onto a low-interest rate card, but be careful. This can be expensive if you don't read the fine print.